Finance Minister Jim Flaherty has kept his promise to open the Tax Court of Canada to poor and disabled adults like Giovanni Tozzi.

Minister of Finance Jim Flaherty during Question Period in the House of Commons on Parliament Hill in Ottawa, Thursday June 9, 2011. THE CANADIAN PRESS/Adrian Wyld

Published on Tue Jun 14 2011

Finance Minister Jim Flaherty has kept his promise to open the Tax Court of Canada to poor and disabled adults like Giovanni Tozzi.

A motion introduced in the House of Commons last week will eliminate an ironic roadblock that Chief Justice Gerald J. Rip last November described as “simply not right.”

Tozzi’s family wanted the Montreal man diagnosed with schizophrenia to have a Registered Disability Savings Plan, which would then qualify him for government contributions toward his future income.

So Tozzi applied in 2009 for the disability tax credit, which is the first step to qualify for an RDSP. But the Canada Revenue Agency said no, then pointed to Tozzi’s lack of taxable income in 2008 as the reason he could not have a family friend appeal the ruling to the Tax Court under its informal procedures.

In other words, CRA was saying Tozzi was not so disabled he would qualify for the tax credit, but his income was not high enough to be ineligible to use the cheapest available route to appeal that ruling.

“This Court unfortunately has no lawful jurisdiction,” Rip wrote in his ruling, pointing to a gap

Flaherty promised to close that gap within days after Rip released his ruling and credited a Toronto Star column about the case for spurring the government to action.

“The notice of ways and means motion introduced in Parliament will become a bill within the next day or two and will doubtless be passed before the summer recess as a very small budget bill,” predicts lawyer David Sherman, editor of the Practitioner’s Income Tax Act.

Jamie Golombek, managing director, tax & estate planning with CIBC Private Wealth Management, said the changes would the require the Canada Revenue Agency to rule on whether a person is eligible for the disabled tax credit and RDSP, and would give the person the right to appeal the ruling to the Tax Court of Canada or Federal Court of Appeal whether or not he or she has taxable income.

“This is very welcome news,” said Golombek. “Many people with a disability have very low income, and therefore have no tax owing. So, without this change, they might never have been able to open a Registered Disability Savings Plan if the CRA disagrees with their claim for disability. This will now allow them to have their day in court.”

Soon Tozzi and others will have a second chance to appeal, and to apply retroactively for RDSP grants and bonds for the years beginning in 2008.

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